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Informist, Wednesday, Jul. 22, 2026

By Gopika Balasubramanium

MUMBAI – Benchmark equity indices are expected to come under selling pressure if crude oil prices continue to rise and sustain near $95-$100 a barrel, analysts said. While most impact of West Asia war has already been factored in, the fresh escalations between the US and Iran, ever since the former revoked the interim peace deal, is still being assessed by the market, they added. The ongoing US-Iran conflict and Yemen's Houthis-led disruptions to key global shipping routes mounted concern about potential oil supply disruptions, analysts said. 

While the June-quarter earnings continue to take centrestage, traders will closely track the movement in crude oil prices. Another worry among investors is the weakening of the rupee owing to escalations in the West Asia war. 

The short-term trend for Nifty 50 seems to be negative, technical analysts said. Further weakness from current level of Nifty 50 could drag the index down to the next crucial support of around 23800-23650 points, Nagraj Shetti, technical analyst at HDFC Securities, said in a note. "Around the lower supports, one may expect another sizeable bounce in Nifty 50," he said. Immediate resistance for the 50-stock index is placed around 24150 points, Shetti said.

On Wednesday, the Nifty 50 index closed at 23996.25 points, down 191.45 points or 0.8%. The 50-stock index fell below crucial support of 24000 points during the second half of the session and hovered around 24980 points till the close. The index fell to a low of 23961.40 points intraday. The BSE Sensex closed at 76755.05 points, down 715.06 points or 0.9%.

Higher crude oil prices are seen as key risk for India, with the country being the world's third-largest crude oil importer. The elevated prices would stoke up inflation, widen the current account deficit and hit margins of corporate companies. While the negative sentiment may persist, there are no expectations of a huge fall in the indices, as the countries are expected to reach a deal to prevent further damage to their respective economies. 

"There are possibilities that both the US and Iran would sit at a negotiation table and once again finding some compromise," G. Chokkalingam, founder and head of research of Equinomics, said. He expects both the countries to be under pressure to end the war or reach a deal as Iranian economy is in a difficult position, with expectations of it contracting in the near term, so is the US, with expectations of inflation inching up due to the war. 

Investors are already worried whether the US Federal Reserve would opt to hike the federal funds rate as there are risks to high inflation due to impact of the West Asia war. As far as Iran is concerned, sustained war would lead to more damage to its already crumbling economy, analysts said. 

"But in the interim, yes, as long as (crude) oil is close to $100 a barrel, the pain (in the market) will continue," the research head said. "But I believe it's a matter of few more weeks," he added. However, he warned of a 2-3% fall in the benchmark indices if the war continued for 2-3 weeks and the crude oil climbed to $100 a barrel. Consequently, there would also be fears that the rupee would further weaken and move towards 100 a dollar, keeping the sentiment extremely negative. 

However, analysts said the June quarter earnings have been more or less in line with expectations, with some even exceeding the view. "Only around (results of) 200 companies have come (so far), it (results) has been good," Chokkalingam said. "But that may not be a reflection of the whole picture, he added. Normally, good results come first, he quipped.

Another event that added to the nervousness of the market participants was US President Donald Trump's announcement to levy steep import duties on generic drug manufacturers after two years of up to 200% by 2029. Trump said generic manufacturers would face 100% tariffs on drugs brought to the US from August 2028 if they fail to move their production to the US. The tariff would be doubled to 200% in August 2029, according to Trump's post on Truth Social.

Analysts termed Wednesday's sharp fall in shares of companies tied to generic manufacturing as a "kneejerk" reaction from traders. The sentiment around the stocks is likely to improve in the coming sessions and a recovery is definitely on cards. Shares of pharma majors such as Cipla, Sun Pharmaceutical Industries, and Dr. Reddy's Laboratories ended 1-2% lower. The mid-caps such as Gland Pharma, Aurobindo Pharma, Lupin, and Zydus Lifesciences ended 2-4% lower. 

"The proposal brings generics--one of the key revenue contributors for Indian pharmaceutical companies in the US--within the scope of tariffs for the first time," Maitri Sheth, research analyst covering pharmaceutical sector at Choice Equities, said. "However, the proposed two-year transition period provides companies with sufficient time to recalibrate their manufacturing footprint and supply chains," she added. According to Maitri Sheth, Ajanta Pharma, Alkem Laboratories, Cipla, Concord Biotech, and Divi's Laboratories would see limited impact due to the proposed tariffs.

Analysts said many Indian companies have started setting up manufacturing units in the US and some are doing the same through strategic acquisitions. Meanwhile, some are doubtful whether the two years would be sufficient to build the required infrastructure and get regulatory approvals to start production for companies who have limited presence in the US. The eventual impact on the companies will depend largely on the final framework of the policy and the exemptions granted, analysts said. 

While the production units set in the US would not completely replace the dependence on exports on India, it would pacify the US leadership on their aggressive approach towards Indian pharma industry, Chokkalingam said. "So, even if it (tariffs) is implemented in September 2028, that will be only three-four months as Trump is relieving from Jan (January) 2029," he added. "So, there is a very high chance of new leadership not pursuing tariffs as these will push the living costs of US citizens substantially," he said. End

US$1 = INR 95.56

Edited by Akul Nishant Akhoury

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